Finance—Public and Private
Rake's Progress
IF a Committee were to be appointed to-morrow to consider the question of the growth in National Expendi- ture, it is highly probable that the terms of reference would be so framed that it would be impossible for its recommendations to cover any ground affected by political policy. And yet, if our expenditure over a long period of years is examined, it will be found that outside actual war expenditure and the aftermath of war expenditure, such as Pensions, the huge advance in our expenditure Which is responsible for the heavy burden of taxation is mainly connected with the policy of successive Govern- ments of all parties, each and all having during their period of office enlarged the outlays for social services irrespective of the power of the Exchequer and of the country to stand the strain.
INCREASED EXPENDITURE.
At the last General Election it was confessedly the object of the Socialist Party to make colossal additions to the National Expenditure and incidentally to taxation. When it was found that the Labour Government was to be a minority Government, there were some who expected that the finance of the first session, at all events, would be severely orthodox, but others, remembering the strength of the extremists in the Party, were fearful of the present year marking the commencement of a fresh orgy of unproductive expenditure. Judging from the measures taken so far, the City sees reason to fear that these apprehensions will be more or less fulfilled. At the present time the social services involve a cost to the country of about £420,000,000 annually, and under the Bills now introduced unemployment doles and increased costs of education promise to add at least 120,000,000 to the expenditure for the coming year, while schemes are outlined involving much heavier permanent expenditure in the near future. And this quite independently of any outlays involved under Mr. Thomas's unemployment relief schemes.
THE NATIONAL CREDIT.
Quite apart from the vital question of whether such expenditure can or cannot be afforded by the community, and apart from the question of the advisability of the outlays, the financial critic is dragged into the duty of commenting upon the matter if only for the reason that it is impossible otherwise to make a fair comment upon such matters as the state of the National Credit and the outlook for Government Loans. To take a practical and concrete instance : I have recently drawn the attention of investors to the merits of the new 5 per cent: Conversion Loan, to the great success of which a further reference will be found in another column. When a British Government Loan is before the investors of the Country, it becomes almost a patriotic duty for the financial journalist to give it every possible support, for the welfare of the National Credit is concerned with its success or failure and that in its turn affects every section Of the community. Nevertheless, the fact remains that if—I only put the case hypothetically—the financial journalist were convinced that the conduct Of the National Finances was of a character which must inevitably injure; in time, the National Credit and occasion a fall in Govern- ment stocks, it would become his duty to warn the investor of the dangers which lay ahead.
BRIBING THE PROLETARIAT.
And if I were to express the underlying thought in the Minds of most commentators upon the National Finances, I do not think I should be far wrong in saying that the - i upper-most feeling is one of considerable anxiety with regard to the trend of events, but that, to some extent, the anxiety is relieved by a general though rather vague belief that underlying social unrest and underlying the doctrines of the Socialist extremist is a strong fund of pound common sense which may be trusted to correct any excesses in National Expenditure or in ,unsoupd, financial and social legislation before matters have gone too far to be retrieved. After all, it is argued, we are a democratic country and can chanuc Governments more or less at our will and, therefore, we have in this power ii kind of guarantee against any real or lasting injury being inflicted upon the finances of the country. Personally, however, I think that this comfortable notion leaves too much out of consideration the fact that this crime against the nation—for it is a crime—of unprofitable and unjustifiable expenditure is not confined to one political party, but is shared by all parties who,. in their desire for power, frame their financial legislation along lines calculated to please the greater mass of the voters.
SUBSIDIZING UNEMPLOYMENT.
But, it will be said, the voters are the entire community, and Governments exist, after all, to fulfil the desires of the community. It is just here, however, that we get to the root of the matter. The desires of the community as expressed in the demand for huge outlays made in recent years for social services have up to the present been sup- plied, for the mast part, out of the capital resources of the country. The money,. in fact, has been provided by those who have had the double distress of being unable to make their protests felt through the power of the vote and at the same time of perceiving that the policy pursued by successive Governments, so far from solving the real problems of the situation, has only served to render more permanent industrial depression, while -in some directions, at least, unemployment as an industry has come to be subsidized. If for the vast outlays on social services during the past decade there had been a good return in the shape of improved trade, greater general prosperity and greater employment, it would be easy to defend those outlays. The very reverse, however, has resulted and the latest proposals of the present Government to give the dole to youths leaving school unable to find immediate employment has stung to the quick the instincts of all self-respecting business men who recognize the inherent folly, to say nothing worse, of such a policy.
SOME ESSENTIALS.
Three requisites would seem to be essential if there is to be an ultimate return to real prosperity in the country with full employment for all combined with real social unity. There must be drastic but intelligent economy in the National Expenditure, accompanied by a wise economy on the part of the community. There must be an abandonment by employers and employed alike of everything which prevents the exercise of the maximum amount of effort and efficiency. This must necessarily mean some sacrifice of time or of money by all concerned.. And finally, there must be a well- devised scheme whereby employers and employed shall determine a sound and rational scheme of sharing in the increased profits accruing from these improvements in organization, effort and general efficiency. ARTHUR W. KIDDY.
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